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Future-oriented Financial Statements

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Future-oriented Statement of Management Responsibility

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial statements rests with Transportation Safety Board of Canada (TSB) management. This future-oriented information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities) and will be used in the TSB's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based on information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in TSB's mandate and strategic outcome. Much of the future-oriented financial information is based on these assumptions, best estimates, and judgment and gives due consideration to materiality. An important limitation to note for the 2012-13 results is that they do not factor in the effect of potential reductions in TSB funding arising from Budget 2012 as this amount is not yet known.

At the time of preparation of this future-oriented information, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal year covered in the accompanying future-oriented information will vary from the information presented and the variations may be material.

The original version was signed by____________________________

Wendy A. TadrosChair

The original version was signed by____________________________

Chantal Lemyre, CGAChief Financial Officer

Gatineau, Canada

March 15, 2012

Future-oriented Statement of Financial Position (Unaudited)

Assets

As at March 31 (in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Financial assets

Due from the Consolidated Revenue Fund

1,802

1,764

Accounts receivable and advances (note 6)

48

98

Total financial assets

1,850

1,862

Non-financial assets

Prepaid expenses

91

86

Inventory

86

130

Tangible capital assets (note 7)

4,922

4,853

Total non-financial assets

5,099

5,069

TOTAL Assets

6,949

6,931

Liabilities and Equity of Canada

As at March 31 (in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Liabilities

Accounts payable and accrued liabilities (note 8)

1,748

1,848

Vacation pay and compensatory leave

1,014

990

Employee future benefits (note 9)

3,053

3,287

TOTAL Liabilities

5,815

6,125

Equity of Canada

1,134

806

TOTAL Liabilities and Equity of Canada

6,949

6,931

Contingent liabilities (note 10)Contractual obligations (note 11)

The accompanying notes form an integral part of these future-oriented financial statements.

The original version was signed by____________________________

Wendy A. TadrosChair

The original version was signed by____________________________

Chantal Lemyre, CGAChief Financial Officer

Gatineau, Canada

March 15, 2012

Future-oriented Statement of Operations (Unaudited)

As at March 31 (in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Expenses

Air investigations

15,988

16,296

Marine investigations

5,089

5,190

Rail investigations

5,373

5,482

Pipeline investigations

540

549

Internal services

7,810

7,839

TOTAL Expenses

34,800

35,356

As at March 31 (in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Revenues

Air investigations

7

9

Marine investigations

1

4

Rail investigations

7

3

Pipeline investigations

-

-

Internal services

11

18

TOTAL Revenues

26

34

Net Cost of Operations

34,774

35,322

Segmented information (note 13)

The accompanying notes form an integral part of these future-oriented financial statements.

Future-oriented Statement of Equity of Canada (Unaudited)

As at March 31 (in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Equity of Canada, beginning of the year

806

(60)

Net cost of operations

(34,774)

(35,322)

Net cash provided by the Government of Canada

31,245

32,439

Change in Due from the Consolidated Revenue Fund

38

(81)

Services received without charge (note 12)

3,819

3,830

Equity of Canada, end of the year

1,134

806

The accompanying notes form an integral part of these future-oriented financial statements.

The accompanying notes form an integral part of these future-oriented financial statements.

Notes to the Future–oriented Financial Statements

1. Authority and Objectives

The Canadian Transportation Accident Investigation and Safety Board (CTAISB) was established in 1990 under the Canadian Transportation Accident Investigation and Safety Board Act and is a departmental corporation named in Schedule II to the Financial Administration Act. In its day–to–day activities the CTAISB is also known by the name Transportation Safety Board of Canada, or simply the TSB. The objective of the TSB is to advance transportation safety. It seeks to identify safety deficiencies in transportation occurrences and to make recommendations designed to eliminate or reduce any such safety deficiencies. In addition to investigations, including where necessary public inquiries into selected occurrences, the TSB may conduct studies into more general matters pertaining to transportation safety. The TSB has the exclusive authority to make findings as to causes and contributing factors when it investigates a transportation occurrence. The TSB's operating expenditures are funded by a budgetary lapsing authority whereas contributions to employee benefit plans are funded by statutory authorities.

The TSB has four key program activities, which are the conduct of safety investigations in the following four transportation sectors:

Air

Marine

Rail

Pipeline

Within each program, personnel conduct independent safety investigations into selected transportation occurrences. They identify causes and contributing factors, assess risks to the system, formulate recommendations to improve safety, publish investigation reports, communicate safety information to stakeholders, undertake outreach activities with key change agents, as well as assess and follow up on responses to recommendations. These activities are carried out by highly qualified investigators who are experts in the transportation operational sectors. They also work closely with personnel who are responsible for executing specialized work in the following fields: engineering and technical, macro-analysis, human performance and communications.

The Internal Services program activity also contributes to the achievement of TSB's strategic outcome. This program activity includes the functions and resources required to support the needs of the program activities of the four transportation modes and to meet the department's corporate obligations in areas such as human resources, finance, administration, information management and information technology.

2. Methodology and Significant Assumptions

The future-oriented financial statements have been prepared on the basis of government policies, priorities and the external environment as at March 15, 2012. The statements have been prepared according to the requirements of Treasury Board Accounting Policies which are based on Canadian generally accepted accounting principles for the public sector. They have been prepared on the assumption that the resources provided will enable TSB to deliver the expected results specified in the Report on Plans and Priorities. The forecasting of future information was compiled on the basis of historical costs and trends.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for 2011–12 and 2012–13, actual results achieved are likely to vary from the forecast information presented, and this variation could be material. Once the Report on Plans and Priorities is presented, TSB will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future–oriented financial statements have been prepared in accordance with Treasury Board accounting policies in effect for the 2011-12 fiscal year. These accounting policies stated below, are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

(a) Parliamentary authorities

The TSB is financed by the Government of Canada through Parliamentary authorities. Authorities provided to the TSB do not parallel financial reporting according to Canadian generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Future–oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a high–level reconciliation between the two bases of reporting.

(b) Net Cash Provided by the Government of Canada

The TSB operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the TSB is deposited to the CRF and all cash disbursements made by the TSB are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

(c) Due from the Consolidated Revenue Fund

Amounts due from the CRF are the result of timing differences at year-end between when a transaction affects appropriations and when it is processed through the CRF. Amount due from the CRF represents the net amount of cash that the TSB is entitled to draw from the CRF, without further appropriations, in order to discharge its liabilities.

(d) Revenues

Revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenue takes place.

(e) Expenses

Expenses are recorded on an accrual basis:

Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.

Services received without charge from other government departments for accommodation, administration of workers' compensation, the employer's contribution to health and dental insurance plans, and external audit services are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The TSB's contributions to the Plan are charged to expenses in the year incurred and represent the total TSB obligation to the Plan. Current legislation does not require the TSB to make contributions for any actuarial deficiencies of the Plan.

Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(g) Accounts receivable and advances

Accounts receivables and advances are stated at the lower of cost and net recoverable value.

(h) Inventories

Inventories consist of parts, material and supplies held for future program delivery and not intended for resale. They are valued at cost using the average cost method. If they no longer have service potential, they are valued at the lower of cost or net realizable value.

(i) Tangible capital assets

All tangible capital assets having an initial cost of $2,000 or more are recorded at their acquisition cost. In addition, acquisitions of all general-purpose furniture and informatics hardware are recorded as tangible capital assets.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Tangible CapitalAsset Class

Amortization Period

Building

40 years

Furniture

10 years

Office equipment and tools

5 years

Laboratory equipment

15 years

Informatics hardware

4 years

Informatics software (purchased)

7 years

Informatics software (in house developed)

10 years

Motor vehicles

7 years

Other vehicles

15 years

Leasehold improvements

Lesser of the remaining term of the lease or useful life of the improvement

Betterments

Over the useful life of the asset to which the improvement was made or the useful life of the betterment if significantly shorter.;

(j) Contingent liabilities

Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(k) Measurement uncertainty

The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities

The TSB receives its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the TSB has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Authorities requested:

(in thousands of dollars)

PlannedResults2013

EstimatedResults 2012

Operating expenditures - Vote 10

26,479

26,730

Transfer from TB – Vote 15 – Compensation adjustments

222

433

Transfer from TB – Vote 25 – Operating Budget Carry Forward

925

1,318

Transfer from TB – Vote 30 – Paylist requirements

-

1,104

Statutory contributions to employee benefit plans

3,619

3,779

Forecasted authorities available

31,245

33,364

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board Central votes.

(b) Reconciliation of net cost of operations to requested authorities:

(in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Net cost of operations

34,774

35,322

Adjustments for items affecting net cost of operations but not affecting authorities:Add (Less):

Services received without charge

(3,819)

(3,830)

Amortization of tangible capital assets

(891)

(938)

Net loss on disposal and write–off of tangible capital assets

(15)

(17)

Employee severance benefits

234

921

Vacation pay and compensatory leave

(24)

17

Miscellaneous revenues

26

34

30,285

31,509

Adjustments for items not affecting net cost of operations but affecting authorities:Add (Less):

Acquisition of tangible capital assets

998

906

Increase (decrease) in prepaid expenses

5

7

Increase (decrease) in inventory

(44)

17

31,245

32,439

Forecasted current year lapse

925

Forecasted authorities available

31,245

33,364

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:

(in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Receivables from other Federal Government departments and agencies

25

77

Receivables from external parties

13

11

Employee advances

10

10

TOTAL

48

98

7. Tangible Capital Assets

(in thousands of dollars)

Cost

Accumulated Amortization

Net Book Value

Capital Asset Class

Opening balance

Acquisitions

Disposals and write-offs

Closing balance

Opening balance

Amortization

Disposals and write-offs

Closing balance

2013

2012

Building

2,142

249

0

2,391

2,072

77

0

2,149

242

70

Furniture

899

47

140

806

390

100

144

346

460

509

Office equipment and tools

77

26

62

41

33

5

20

18

23

44

Laboratory equipment

2,485

60

167

2,378

1,634

93

167

1,560

818

851

Informatics hardware

1,914

215

473

1,656

1,445

264

473

1,236

420

469

Informatics software (purchased)

684

49

30

703

570

43

30

583

120

114

Informatics software (in-house developed)

3,400

251

0

3,651

1,262

229

0

1,491

2,160

2,138

Motor vehicles

639

89

75

653

328

39

75

292

361

311

Other vehicles

102

0

0

102

62

7

0

69

33

40

Leasehold improvements

606

12

0

618

576

30

0

606

12

30

Betterments

851

0

0

851

574

4

0

578

273

277

TOTAL

13,799

998

947

13,850

8,946

891

909

8,928

4,922

4,853

8. Accounts Payable and Accrued Liabilities

The following table presents details of accounts payable and accrued liabilities:

(in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Accounts payable to other government departments and agencies

426

362

Accounts payable to external parties

753

858

1,179

1,220

Accrued liabilities

569

628

TOTAL

1,748

1,848

9. Employee Benefits

(a) Pension benefits

The TSB's employees participate in the Public Service Pension Plan which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the TSB contribute to the cost of the Plan. The 2012-13 TSB forecasted expense amounts to $2,592,587 ($2,655,184 forecasted in 2011-12).

The TSB's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

(b) Severance benefits

The TSB provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:

Accounts Payable and Accrued Liabilities

(in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Accrued benefit obligation, beginning of year

3,287

4,208

Expense for the year

201

201

Expected benefit payments during the year

(435)

(1,122)

Accrued benefit obligation, end of year

3,053

3,287

In the 2011 Budget, the Government of Canada announced its intention to revise its employee benefits package to eliminate severance benefits payable upon voluntary separation or retirement of an employee. Collective agreements reflecting this change in employee benefits have been signed with certain bargaining agents. As a result, these employees have been provided the option to be paid in full or a portion of their severance entitlement beginning in fiscal year 2011-12 or to defer payment to a future year. The estimated payout and reduction to the TSB's employee severance liability from this government-wide event has resulted in a significant reduction to the TSB's estimated accrued benefit obligation.

10. Contingent Liabilities

In the normal course of its operations, the TSB becomes involved in legal actions. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded on the TSB's financial statements. The TSB does not anticipate any contingent liabilities for 2011-12 or 2012-13.

11. Contractual Obligations

The nature of the TSB's activities can result in some large multi-year contracts and obligations whereby the TSB will be obligated to make future payments when the services/goods are received.

Contractual obligations as at March 31, 2012 represent a total of $444,347, broken down as follows:

Contractual Obligations

(in thousands of dollars)

2011-12

2012-13

2013-14

2014-15

2015-16

Acquisition of goods and services

431

13

-

-

-

12. Related Party Transactions

The TSB is related as a result of common ownership to all Government of Canada departments, agencies and Crown corporations. The TSB enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the TSB receives services which are obtained without charge from other Government departments.

Services received without charge:

During the year, the TSB received without charge from other departments: accommodation, administration of workers' compensation, the employer's contribution to health and dental insurance plans, and external audit services.

These services without charge have been recognized in the TSB's Future-oriented Statement of Operations as follows with a corresponding amount in the Equity of Canada:

Services received without charge

(in thousands of dollars)

PlannedResults2013

EstimatedResults2012

Accommodation

1,925

1,940

Employer's contribution to health and dental insurance plans

1,777

1,769

External audit services

94

99

Administration of workers' compensation

23

22

TOTAL

3,819

3,830

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the TSB's Future-oriented Statement of Operations given that a reasonable amount for those types of services cannot be determined.

13. Segmented Information

Presentation by segment is based on the TSB's program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues.